DJ ICE Coffee Review: Modest Gains On Short Covering

ICE U.S. arabica coffee futures on Friday closed modestly higher and near mid-range, on a corrective short-covering bounce from recent selling pressure, said an analyst. December coffee closed up 95 points at $1.2230. September coffee closed up 95 points at $1.2110.

« Coffee has been an up-and-down market » this week, said James Cordier, portfolio manager at OptionSellers.com. Short covering, or the buying back of previously sold positions, was also featured Friday, said another analyst.

Cordier added that the recent sell off in coffee futures prices may soon attract some roaster buying interest at the lower price levels. He said the roasters have been buying « hand-to-mouth » recently, but may be ready to step up and make some buys soon.

In London Liffe trading, robusta coffee futures were slightly up late Friday in Europe. Market attention is on the September contract expiry Tuesday, said a London-based trader. In other news, Brazilian green coffee exports for Aug. 1-27 hit 1,603,060 60-kilogram bags, according to preliminary figures from the Brazilian Green Coffee Exporters Council, or Cecafe. This compares to 1,157,351 bags exported in the same period in July.

Brazil’s main arabica coffee regions should see dry weather this weekend and next week, according to weather service Somar on Friday. Coffee-growing areas such as Varginha and Pocos de Caldas in the south of Minas Gerais state, Brazil’s No. 1 coffee-producing region, were warm and dry on Friday. After a
damp week, the dry weather will allow coffee producers to easily harvest their arabica coffee crop and dry their beans in their yards, said Somar.

Volume in ICE coffee was estimated by the exchange at 4,935 contracts, with 1,037 puts traded and 2,354 calls traded.

ICE       Change     Range
Sep   $1.2110    +95 pts  $1.2065-$1.2200
Dec   $1.2230    +95 pts  $1.2170-$1.2360

Source : FutureSource